I may take some flack about this, and yes there are always exceptions....however...in general it takes a lot of money to take part in the strategies that actually "work" to the degree that someone can make a few hundred $$grand a year. Opening only alone takes at least $1Mil, just to try to make $3K a week or so. Pairs trading, M&A, market making, core position trading, etc. all take quite a bit of money. Lower risk strategies, higher reward, but very capital intensive.... learning and using these strategies are what we try to teach our people, and then let them use our money to engage in them. Where else can you use a $mil or two daily for free? Even PDT is tough...... All the best, Don
Low risk, high reward and capital intensive? That doesn't compute. An opening order strategy entails inter-market dispersion; i.e., many tickers across many sectors, across many betas and volatilities. Your r/r is a function of of capital in use and correlation. What's the risk on your "OO" strat that produces this 14% non-compounded annual return($3k per week on a mil)?
Hmmm, well "ok"...let's see now...first off, I read and replied above before I read this commentary so here goes. 1. Yes, most business ventures fail the first year, about 90%. About 50% of our traders decide to quit before the second year, for various reason...so, perhaps, just perhaps, trading can be considered a more likely avenue than "most" business ventures. 2. If a trader thinks trading is easy then they haven't spoken to me, ever. Some trading is simple, but it's certainly not easy...it takes a lot training, time, and capital usage. 3.. I encourage our people to start wtih 100 shares, move up when they have a winning game...and, sure, being able to move up in share size is good, especially when you can use other peoples money for free (ala "hedge funds" LOL). No "illusion" or "delusion" or "rose colored glasses" from me, that's the retail guys and the "Wize" "Teach me to trade" types. We are a licensed and registered broker dealer who simply offers a professional alternative to those who think they can do well trading....and back it up with a very strong success ratio. I do agree that "allocation" of capital makes sense...and learning how to read the tape makes sense.... The only offer is an "attainable" upside potential, and a "very limited" downside...and no "franchise fees" or employees to hassle with, you know, all the reasons that trading is attractive to the independent entrepreneur. FWIW... Don
Don, I was wondering what type of training your firm provides and what is the success rate of those you train. I know it's a pretty broad question that can have a few answers,but in general what is their success rate? I used to be a Market Maker, then Prop Trader and recently left the trading world looking for a different type of challenge( Financial Advisor). When I used to trade I always heard firms say they provide "Training" but never really saw any (structured) long term training, it was a guy telling them what a bid and ask was and how to read the tape.That does not equal success. I was just wondering your take on it. Thanks Don.
www.stocktrading.com/training.html 3 day class open to public. 4 week bootcamp, only after you join the firm.. College classes (our way of "giving back" to the community...try to keep people away from brokers and other weasels. Advance pairs classes in Canada. Our focus is on the strategies that actually "work" - pairs, M&A, automation of opening only orders, scalper black boxes...a myriad of things that are usually "capital intensive" but lower risk and higher reward than most people have seen. Success rate is better than most, but as always, it's up to the individual...we provide training, tools, and money...if they can't do it here, they probably should re-think the whole trading career thing is what I tell people. Don
Thanks Don, that was a good explanation. It seems that you do provide one of the better training environments and you give prospects a fighting chance with a structured, well planned program.
I think I'll start a trading firm. The only problem is the trader failure rate and the constant need to recycle these guys. Wait... Maybe if I require a higher buy-in and get them into more shares, I can at least make more money until/if they bust out. Is this Bright's Mission Statement? Is this also the reason why Bright has no NYC office? Because if they did, they would be so uncompetitive, the office would be a ghost town.
44 Offices back in the last century when it cost $25K-$50K to put in enough T-1 lines to be properly connected....now, most of our growth is remote because everyone can get a cable modem for $50 bucks....why would anyone waste $$zillions just to be in NYC? When Goldman left, we did too...no need to waste that money....talk about un-competitive...those who stayed ... Bring in serious traders who care enough about their trading business to be adequately capitalized, not just "shooters" with a few grand (there are enough desperate firms for these guys). Been with same clearing firm since 1978. Have same core group of traders since early 1990's.... I could go on, but I think our success speaks for itself...and with the exodus of returning traders this year, we are on track for our best year ever. Sorry to interfere with your anger about BT, or whatever it is, but facts are facts....where are you trading, let's chat about them for a while...it's only fair to give them the same chance to enhance their business, like you've given me with this discussion. Which firm might that be? (I'm just playing around, I don't really expect an answer, and I'm not at all upset)... Thanks again!! Don
Goldman moved to Jersey City because the city only gave them a portion of the tax breaks they were insisting on. I doubt you have such a high-class problem. My issue with Bright is that I think you are preying on losers by saying that you aren't. You are requiring more upfront capital and getting complete newbies into thousands of shares. How does that preserve capital? Don, that's just plain reckless and misleading. Please debate the logical of: Requiring more capital in order to get people into more shares of stock in order to pump up commissions while they are there. A trading firm cannot make a trader trade successfully. So, it logically follows that such a firm should seek to maximize commission revenue while the trader is trading. This is accomplished by requiring more money in order to give them more BP, in order to collect more commission on bigger (albeit still reckless) trades. You recognize that undercapitalization is an achilles heel - but what about newbies getting into too much size? I spoke on the phone with you for 30 seconds about a year ago - and after 10 seconds, you made clear to me that 1 million in BP would not be a problem. You had no knowledge of my experience whatsoever. Seems pretty transparent to me.